The New Hotel Mantra – “Drive Profitable Direct Bookings”

You are witnessing an upheaval within the Online Travel Agency space and it doesn’t necessarily spell good news for independent luxury hotels. Expedia buying Travelocity. Booking.com no longer sharing client emails with hotels. Analysts estimate that Expedia, Priceline and Travelocity will generate a combined $80 billion in hotel and vacation rental bookings this year. And so it goes.

OTAs are becoming increasingly aggressive in siphoning business away from their “hotel partners.” Do any OTAs you work with buy your branded keywords? You work hard to build brand awareness and the OTAs are there to snare the booking when someone does a search specifically for your hotel. Not fair? You bet!

Don’t expect this competition to lighten up any time soon. It will most likely intensify. Consequently, there has never been a better time for hotels to commit to driving significantly more direct bookings. Here are some actions you should consider taking immediately.

DetermineYour OTA Costs – OTAs get net rates, therefore it’s difficult to determine just how much your hotel is paying for their service. However, you can go to OTA Hidden Cost Calculator, enter a few figures and get a good sense of what OTAs are costing you. In the majority of tests we have run for small luxury hotels, the amount paid to the OTAs was significantly more than what the hotel spent on marketing directly to consumers.

Commit to Capturing Every Email Address– If your best prospects are your current customers (and they are), then each guest’s email address is like a little golden nugget. With first-hand experience at your property getting a past guest to become a repeater should be significantly less expensive than attracting a first-time guest. Staying in touch and providing relevantinformation will encourage them to both return and recommend your hotel to friends and relatives. Put a plan in place to make sure you capture every email address. It may not be easy, but the long-term financial health of your hotel depends on it. You need to turn your PMS into a high production goldmine for years to come.

Embrace Customer Relationship Marketing – CRM, when implemented properly can provide hotels with a significant boost in overall occupancy and revenue. It should increase revenue from all sources, but particularly from direct bookings.

iCRM drives direct bookings

There are a number of hotel specific CRM software options like NAVIS on the market today. They tie-in to your PMS so you can actually measure revenue generated as a result of any marketing effort. For email you receive information on opens, click-throughs, and revenue generated. Send customized confirmations, pre-arrival and thank-you emails. Set automatically triggered emails to be sent to specific segments of your database.

In short, CRM has the ability to differentiate your property by sending relevant messages and content to your guests and prospects thus talking to them on a 1-to-1 basis. Isn’t this the way to grow relationships?

Hire Direct Marketing Specialists – Direct marketing is a science designed to get people to act – open an email, click through to a website, book a vacation or call reservations for more information. There is an extensive body of research with proven techniques to get people to do what you want them to do. It is very different from simply composing messages or writing advertising copy. Head-to-head tests of copy written by direct marketing specialists and advertising copywriters show the hands down winners are the DM specialists. Beyond that, effectively building, segmenting and managing a hotel’s database takes an expert. It is very different than managing an Excel spreadsheet. If you want to maximize direct bookings make sure you are working with Direct Marketing experts. The best ones will show case studies that emphasize the revenue they have helped generate.

Integrate Your Marketing – Hoteliers need to move away from housing their various marketing disciplines (web, PPC, PR and advertising, etc.) in silos with little cross-platform communication. There are just too many moving parts today. As a hotelier have you ever tried to keep five, six or seven different marketing partners up to speed on all your strategies and initiatives? It’s beyond Herculean – it’s impossible. Having fewer partners who offer an array of services you need can make your life easier and increase productivity at the same time. These are two of the main benefits of a new breed of integrated Customer Relationship Marketing (iCRM) specialists. While hoteliers may think that iCRM is expensive the truth is it’s probably not much more than what they have budgeted for marketing and could actually be less.

Have 24/7 Direct Booking Capability – Most luxury hotels attract guests from many different times zones so your reservations department needs to be open 24/7 to answer questions and encourage each caller to Book Now. Don’t let them go. If reservations is not open 24/7 it is better to switch after hours calls to a live operator that can take information and have a reservationist return their call ASAP. Don’t send it to voicemail. Our research shows that few people like to leave phone messages so potentials sale can be lost. It goes without saying that your online booking engine should be state-of-the-art with all your inventory available whenever a potential guest feels like booking.

Summary

OTAs will process over $80 billion in hotel bookings this year andare on track to do even more in 2016. In the process, by training people to buy on price, they will be commoditizing your hotel and every other one on their site.

Hotels cannot survive by paying 20-25% commission to OTAs and participating in all their promotions that squeeze your margins.

The only way an independent luxury hotel can competein the future is to maximize its percentage of direct (commission-free) bookings. It’s not impossible. And in fact it is both easier and more cost effective than you may think.

Take up the mantra – Drive Profitable Direct Bookings!

NB: This article was first published on LinkedIn. Connect with me to be among the first to see new articles .

Tags:

AUTHOR:
Madigan Pratt

Madigan Pratt is President of MP&A Digital & Advertising, an award-winning agency helping luxury hotels attract and retain profitable customers. Principals with over 60 years of collective experience at some of the world's largest advertising and direct marketing companies lead the agency's team of marketing, creative, public relations, Internet and social media professionals.

3 Comments

I agree with the suggestion to capture every customer’s email address. Over time, these lists can build to be a sizable online asset. Thank you for informing on this topic. Very interesting.

July 6, 2015

David

New? The “drive profitable direct bookings” mantra is nothing more than a dated and overplayed argument heavily utilized by hoteliers against their third party distribution channels. This article is a weak attempt at diminishing the direct and indirect value the OTA’s offer their hotel partners and worse yet a (less than) subtle attempt at selling your own services.

Additionally, what is not mentioned in this article is that OTA’s fees/margins are only consumed by the hotels on actual bookings made on the OTA site. So the marketing of the property, to highly qualified shoppers, is essentially free until these bookings takes place.

However, I’d like to be objective on this and request a comparison of the services, so subtly, offered in this article and those of the OTA’s. This would actually help your audience determine which has the highest efficacy based on cost.

I can only surmise that you are not a hotelier, but a representative for an OTA so we do have some opposing views. I do believe OTAs offer a valuable service and much needed revenue for hotels when used in moderation and strategically in certain need periods.

It may be difficult to make a direct comparison the services offered by an OTA vs, those of a full-service hospitality CRM marketing company as you suggest. That’s why five years ago I published an article entitled, “BREAKING THE HOTEL ADDICTION TO OTAs” which included an OTA Cost Calculator. This gave hotels the ability to see what they were paying the OTAs and their CRM marketing firms. From there, they can do their own cost/benefit analysis.

I am sure you think I am anti-OTA, but I’m not. As mentioned above I believe OTAs offer a valuable service…when used in moderation. Here’s what I object to:

 OTAs buying hotel name keywords so they can “steal” a sale and collect up to 30% off the hotel’s marketing efforts and expense.

 OTA contracts that mandate rate parity. When hotels occupancy is down (because the OTAs are not delivering) and hotels need to promote to attract more guests the OTAs are there to take their 25-30% of a reduced rate leaving the hoteliers with significantly less and maybe even a loss.

 Hotels that have forgotten how to effectively market themselves and are happy receive an OTA check for $375,000 two months after their guests departed, not understanding that it was for $500,000 in inventory.

OTAs are not going away anytime soon. But hoteliers need to know they can, if they so chose, have a way to build strong relationships with all their guests, drive more profitable direct bookings, control their own future and not be held hostage by (or addicted to) the OTAs.